More jobs created but workforce shrinks

Australia's unemployment rate remained steady in October but there were fewer people looking for jobs and fewer hours being worked.

Official figures released on Thursday showed the unemployment rate remained at 5.4 per cent in October, with 10,700 extra people finding employment in the month.

However, the percentage of working age Australians either employed or looking for work declined by 0.1 to 65.1 per cent, figures released by the Australian Bureau of Statistics showed.

Commsec economist Savanth Sebastian said the figures suggested the labour market was treading water amid a period of weak consumer confidence and concerns about a possible downturn in the global economy.

"Employers aren't keen to hire unless they have to, given the global uncertainty," he said.

"But while jobs are being lost in some industries, clearly they are being created in other industries."

However, ANZ economist Justin Fabo warned the number of jobs created in October was not enough to keep up with population growth.

He said about 17,000 new jobs were needed each month to keep up with the rising population, which meant the unemployment rate would rise in the coming months if the labour market did not improve.

"Population growth is strengthening in Australia, so stronger employment outcomes are necessary to stop upward pressure on the unemployment rate," he said.

The ABS figures also showed the total number of hours worked in the month declined 0.3 per cent and was down 1.2 per cent compared to October 2011.

There were also signs that the positive impact of the mining boom on the jobs market may be starting to wane, with resource-rich Western Australia's unemployment rate jumping 0.6 to 4.6 per cent.

Queensland, the other major mining economy, lost 1400 jobs, though its unemployment rate declined 0.1 to 6.2 per cent due to a 0.2 percentage point contraction in the size of its workforce.

National Australia Bank senior economist Spiros Papadopoulos said the figures were unlikely to persuade the Reserve Bank of Australia to cut its key interest rate in December.

"Whatever they were thinking (about the labour market) earlier this week, I don't think this would have changed their outlook," he said.

"I don't think the figures today really increase or decrease the chances of them going in December."

The RBA kept the cash rate on hold at 3.25 per cent at its November board meeting on Tuesday.

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